MANILA, Philippines – LT Group Inc., the newly-consolidated flagship holding firm of tobacco, beer and airline magnate Lucio Tan, has set up a dividend policy promising shareholders potentially hefty returns for a profitable performance.
In a disclosure to the local bourse, LT Group said its board of directors “approved the adoption of a dividend policy that provides for the company to declare dividends of approximately 20 percent to be paid out of the unrestricted retained earnings.”
Unrestricted earnings represent available cash that can be handed out to stockholders as dividends. The distribution of such unrestricted retained earnings will not affect the financial strength and competitiveness of a company.
LT Group said the dividend declaration depends on several consideration of the board of directors.
Specifically, the board should decide on factors like “restriction of current and prospective financial covenants, current and prospective capital needs of planned projects and regulatory capital requirements of subsidiaries, among others,” LT Group said.
LT Group serves as the umbrella company for Tan’s various businesses including Asia Brewery Inc., Fortune Tobacco Corp., Eton Properties Philippines Inc., Philippine Airlines, Air Philippines Corp., Philippine National Bank (PNB) and Allied Banking Corp.
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The conglomerate is banking on good prospects this year, particularly due to the election season that will boost consumer spending.
In the nine months to September last year, LT Group’s net income slightly fell to P2.5 billion from P3.08 billion a year earlier as net sales slipped to P18.9 billion from P19.28 billion.
Meanwhile, the listed firm, formerly known as Tanduay Holdings Inc., increased its shares in two companies that hold a minority stake in Allied Bank.
LT Group bought 380 million common shares in Solar Holdings Corp., which own 13.81 percent of Allied Bank.
“The said subscription was paid in full by way of conversion into equity of the company’s advances to Solar to the extent of P380 million,” the company said.
LT Group, pending the Securities and Exchange Commission’s approval of the increase in authorized capital stock of Solar, will end up owning 95 percent of Solar.
In a separate transaction, LT Group also converted the P546 million it loaned to Caravan Holdings Corp. into shares.
LT Group subscribed to 900 million shares in Caravan. Also pending the corporate regulators’ approval, LT Group will own 90 percent of the outstanding shares in Caravan, which own 13.81 percent of Allied Bank.